Often, people ask us; does debt consolidation work? This is usually followed by; what is the difference between a debt negotiation, debt settlement, debt relief or debt management company. In essence, all these companies are all very interchangeable. They differ a great deal however from what is described as a debt consolidation company however.
To begin with a debt negotiation companies deal directly with the credit card companies. They take the amount you originally owe a creditor, (say $10,000 to company A), and negotiate that down with the credit card company to a fraction of what you currently owe; say $.20 to $.40 cents on the dollar. Therefore, after the negotiation is done, instead of owing the entire $10,000, you may end up only owing the credit card company $3,000. That is a whopping $7,000 savings, meaning you are going to get out of debt a lot sooner than having to pay off the entire $10,000.
Now, let’s assume you have five credit cards and your total debt is $35,000. By working with a debt settlement company such as Nationwide Debt Reduction, Inc., you could end up paying only half of that once the negotiators have finished negotiating directly with each of your creditors. You would be out of debt in three years or less!
Debt consolidation companies, on the other hand, are mostly owned by the credit card companies themselves. All they do is act as a third-party for you in that you make a monthly payment to them (they determine the amount, not you) and then pay your bills for you. You are still paying off the entire balance, so there is no “relief” when utilizing a debt consolidation company.
In fact, the dropout rate with people who sign up for a debt consolidation plan is almost 905 within the first year alone. Why? Because these companies are not doing anything for you that you cannot do yourself. You need someone who will negotiate your principal down by at least 50%, not someone to pay your bills for you.
Finally, one of the worst things that these companies will do is put a mark on all three of your credit bureau reports to make it seem like you filed for bankruptcy. Why? They want to protect all the other credit card companies from ever giving you another credit card again! (Naturally they do not tell you this, or you would be insane to sign up with one of them in the first place.) Therefore, to answer our original question of, does debt consolidation work, the answer is NO!
Do your homework! Do the research. Don’t just trust the first person you talk to over the telephone. Go online to the Better Business Bureau and look up the company. See how many people have filed a complaint against the company. Then decide what debt settlement program is right for you. Again, if you are the typical American family who has on average 5-7 credit cards, and owes roughly $35,000 in unsecured credit card debt, this can be reduced to close to $20,000 if not less through the debt negotiation process. If you are making just the minimum monthly payment (say $875), than lower that to $550/month, saving yourself an extra $325/month. Then put that $550/month, towards your debt reduction program. That way, you will be completely debt free in 3 years! ($20,000 divided by $550 = 36 months). You owe it to yourself to get these legal loan sharks off your back for good!
Therefore, if you find yourself stuck in what we call “the debt trap” than you a choice; debt consolidation or debt reduction. Do you want the debt relief program that takes you 36 months to become completely debt free or do you take the debt consolidation plan that would take you 212 months to become debt free?
If you want the debt relief program and truly want to eliminate your credit card debt call Nationwide Debt Reduction today 800-890-6658. Talk to a professional debt advisor. Get a free no obligation quote on how soon it would take you get out of debt, then decide which plan is right for you.
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